SATURNINO v PHILAMLIFE
information given by her in her application
FACTS:
The policy sued upon is one for 20-year
endowment non-medical insurance.
This kind of policy dispenses with the
medical examination of the applicant
usually required in ordinary life policies.
However, detailed information is called for
in the application concerning the
applicant's health and medical history.
The written application in this case
was submitted by Saturnino to
appellee on November 16, 1957,
witnessed by appellee's agent
Edward A. Santos. The policy was issued
on the same day, upon payment of the
first year's premium of P339.25.
CLAIM. On September 19, 1958 Saturnino
died of pneumonia, secondary to
influenza. Appellants here, who are her
surviving husband and minor child,
respectively, demanded payment of the
face value of the policy. The claim was
rejected and this suit was
subsequently instituted.
It appears that two months prior to the
issuance of the policy or on September 9,
1957, Saturnino was operated on for
cancer, involving complete removal of the
right breast, including the pectoral
muscles and the glands found in the right
armpit. She stayed in the hospital for a
period of eight days, after which she was
discharged, although according to the
surgeon who operated on her she could
not be considered definitely cured, her
ailment being of the malignant type.
NON-DISCLOSURE. Estefania A. Saturnino
did not make a disclosure thereof in her
application for insurance. On the contrary,
she stated therein that she did not have,
nor had she ever had, among other
ailments listed in the application, cancer
or other tumors; that she had not
consulted any physician, undergone any
operation or suffered any injury within the
preceding five years;
ISSUE: W/N the insured made false rep. of
material facts to avoid the policy
HELD:
Yes.
There can be no dispute that the
for insurance was false, namely, that she
had never had cancer or tumors, or
consulted any physician or undergone any
operation within the preceding period of
five years.
The Insurance Law (Section 30) provides
that "materiality is to be determined not
by the event, but solely by the probable
and reasonable influence of the facts upon
the party to whom the communication is
due, in forming his estimate of the
proposed contract, or in making his
inquiries."
CONTENTION: Facts not material due to
non-medical nature of the insurance
w/o merit; If anything, the waiver of
medical examination renders even
more material the information
required of the applicant concerning
previous condition of health and
diseases suffered, for such information
NECESSARILY CONSTITUTES AN
IMPORTANT FACTOR WHICH THE INSURER
TAKES INTO CONSIDERATION IN DECIDING
WHETHER TO ISSUE THE POLICY OR NOT.
It is logical to assume that if appellee had
been properly apprised of the insured's
medical history she would at least have
been made to undergo medical
examination in order to determine her
insurability.
CONTENTION: Appellants also contend
there was no fraudulent concealment of
the truth inasmuch as the insured herself
did not know, since her doctor never told
her, that the disease for which she had
been operated on was cancer
SC: In this jurisdiction a concealment,
whether intentional or unintentional,
entitles the insurer to rescind the
contract of insurance, concealment
being defined as "negligence to
communicate that which a party
knows and ought to communicate"
The insurer, relying upon the belief
that the assured will disclose every
material fact within his actual or presumed
knowledge, is misled into a belief that the
circumstance withheld does not exist, and
he is thereby induced to estimate the risk
upon a false basis that it does not exist."
RULING: ONLY AWARDED RETURN OF THE ISSUE: Was the age of the insured
PREMIUMS PAID AND NOT THE FULL concealed?
AMOUNT OF POLICY
HELD:
Reversed.
EDILLON v MANILA BANKERS
The age of the insured Carmen 0. Lapuz
FACTS: was not concealed to the insurance
company. Her application for insurance
Sometime in April 1969, Carmen O, Lapuz coverage which was on a printed form
applied with respondent insurance furnished by private respondent and which
corporation for insurance coverage contained very few items of information
against accident and injuries. She clearly indicated her age of the time
filled up the blank application form given of filing the same to be almost 65
to her and filed the same with the years of age.
respondent insurance corporation. In the
said application form which was dated DESPITE KNOWLEDGE IT RECEIVED HER
April 15, 1969, she gave the date of her PREMIUM PAYMT. Despite such information
birth as July 11, 1904. On the same which could hardly be overlooked in the
date, she paid the sum of P20.00 application form, considering its
representing the premium for which she prominence thereon and its materiality to
was issued the corresponding receipt the coverage applied for, the
signed by an authorized agent of the respondent insurance corporation
respondent insurance corporation. (Rollo, received her payment of premium
p. 27.) and issued the corresponding
certificate of insurance without
CLAIM. During the effectivity of Certificate question.
of Insurance No. 12886, Carmen O. Lapuz
died in a vehicular accident in the North MOREOVER, the accident which resulted in
Diversion Road. petitioner Regina L. the death of the insured, a risk covered by
Edillon, a sister of the insured and the policy, occurred on May 31, 1969 or
who was the named beneficiary in the FORTY-FIVE (45) DAYS after the insurance
policy, filed her claim for the coverage was applied for. There was
proceeds of the insurance, submitting sufficient time for the private
all the necessary papers and other respondent to process the application
requisites with the private respondent. and to notice that the applicant was
over 60 years of age and thereby
COMPLAINT.Her claim being denied, she cancel the policy on that ground if it
instituted present action in CFI. was minded to do so.
CONTENTION: the respondent insurance ESTOPPEL. Under the circumstances, the
corporation relies on a provision contained insurance corporation is already deemed
in the Certificate of Insurance, excluding in estoppel. Its inaction to revoke the
its liability to pay claims under the policy despite a departure from the
policy in behalf of "persons who are exclusionary condition contained in
under the age of sixteen (16) years of the said policy constituted a waiver
age or over the age of sixty (60) of such condition, as was held in the
years ..." It is pointed out that the case of "Que Chee Gan vs. Law Union
insured being over sixty (60) years of age Insurance Co., Ltd.,
when she applied for the insurance
coverage, the policy was null and void, RULING: REVERSED; ORDERED TO PAY
and no risk on the part of the respondent PROCEEDS OF THE INSURANCE FOR
insurance corporation had arisen P10,000.
therefrom.
RTC: dismissed the complaint and ordered
return of premium paid because the MA. LOURDES FLORENDO v PHILAM
insured was NOT aware of the said PLANS
prohibition (since contract of adhesion)
FACTS:
Manuel Florendo filed an application for
comprehensive pension plan with
respondent Philam Plans, Inc. (Philam
Plans) after some convincing by
respondent Perla Abcede. The plan had a
pre-need price of P997,050.00, payable in
10 years, and had a maturity value
of P2,890,000.00 after 20 years.[1] Manuel
signed the application and left to Perla the
task of supplying the information needed
in the application.[2] Respondent Ma.
Celeste Abcede, Perlas daughter, signed
the application as sales counselor.
Aside from pension benefits, the
comprehensive pension plan also provided
life insurance coverage to Florendo. Under
the master policy, Philam Life was to
automatically provide life insurance
coverage, including accidental death, to
all who signed up for Philam Plans
comprehensive pension plan.
If the plan holder died before the
maturity of the plan, his beneficiary
was to instead receive the proceeds
of the life insurance, equivalent to
the pre-need price.
Philam Plans issued Pension Plan
Agreement PP43005584[8] to Manuel, with
petitioner Ma. Lourdes S. Florendo, his
wife, as beneficiary. In time, Manuel paid
his quarterly premiums.[9]
CLAIM. Eleven months later or on
September 15, 1998, Manuel died of blood
poisoning. Subsequently, Lourdes filed a from Philam Plans. The pertinent portion of
claim with Philam Plans for the payment of
the benefits under her husbands plan.
[10]
Because Manuel died before his
pension plan matured and his wife
was to get only the benefits of his life
insurance, Philam Plans forwarded
her claim to Philam Life.
DECLINED CLAIM. Philam Life found that
Manuel was on maintenance medicine for
his heart and had an implanted
pacemaker. Further, he suffered from
diabetes mellitus and was taking
insulin. Thus, she filed the present suit.
RTC: Pay proceeds of the insurance plus
pension benefit upon maturity of plans
CA: Reversed
ISSUE: Whether or not the CA erred in
finding Manuel guilty of concealing his
illness when he kept blank and did not
answer questions in his pension plan
application regarding the ailments he
suffered from
HELD:
One. Lourdes points out that, seeing the
unfilled spaces in Manuels pension plan
application relating to his medical history,
Philam Plans should have returned it to
him for completion. Since Philam Plans
chose to approve the application just as it
was, it cannot cry concealment on
Manuels part.
CONTENTION: But Lourdes is shifting to
Philam Plans the burden of putting on the
pension plan application the true state of
Manuels health. She forgets that since
Philam Plans waived medical
examination for Manuel, it had to rely
largely on his stating the truth
regarding his health in his
application. For, after all, he knew more
than anyone that he had been under
treatment for heart condition and diabetes
for more than five years preceding his
submission of that application. But he kept
those crucial facts from Philam Plans.
Besides, when Manuel signed the pension
plan application, he adopted as his own
the written representations and
declarations embodied in it. It is clear from
these representations that he concealed
his chronic heart ailment and diabetes
his representations and declarations read
as follows:
I hereby represent and declare to the best
of my knowledge that:
(c) I have never been treated for
heart condition, high blood pressure,
cancer, diabetes, lung, kidney or
stomach disorder or any other physical
impairment in the last five years.
Lourdes next points out that it made no
difference if Manuel failed to reveal the
fact that he had a pacemaker implant in
the early 70s since this did not fall within
the five-year timeframe that the disclosure
contemplated.[24] But a pacemaker is an
electronic device implanted into the body
and connected to the wall of the heart,
designed to provide regular, mild, electric
shock that stimulates the contraction of
the heart muscles and restores normalcy
to the heartbeat.
RESCISSION. Manuels concealment
entitles Philam Plans to rescind its
contract of insurance with him.
MOREOVER. The same may be said of
Manuel, a civil engineer and manager of a
construction company.[33] He could be
expected to know that one must read
every document, especially if it creates
rights and obligations affecting him,
before signing the same. Manuel is not
unschooled that the Court must come
to his succor. It could reasonably be
expected that he would not trifle with
something that would provide additional
financial security to him and to his wife in
his twilight years.
RULING: CA DECISION AFFIRMED.
GREPALIFE v CA
FACTS:
A contract of group life insurance was
executed between petitioner Grepalife and
Development Bank of the Philippines.
Grepalife agreed to insure the lives of
eligible housing loan mortgagors of
DBP.
Dr. Wilfredo Leuterio, a physician and a
housing debtor of DBP applied for
membership in the group life insurance
plan. In an application form, Dr. Leuterio
answered questions concerning his health
condition as follow:
Have you ever had consulted a doctor for
a heart condition, etc? NO.
CLAIM. On August 6, 1984, Dr. Leuterio
died due to massive cerebral hemorrhage.
Consequently, DBP submitted a death
claim to Grepalife. Grepalife denied the
claim alleging that Dr. Leuterio was
not physically healthy when he
applied for an insurance coverage on
November 15, 1983.
DENIAL OF CLAIM. Grepalife insisted that
Dr. Leuterio did not disclose he had been
suffering from hypertension, which caused
his death.Allegedly, such non-disclosure
constituted concealment that justified the
denial of the claim.
RTC: In favor of widow
CA: sustained
ISSUE: W/N Dr. Lieuterio concealed that
he had hypertension, w/c would vitiate the
insurance contract
HELD:
Concealment exists where the assured
had knowledge of a fact material to the
risk, and honesty, good faith, and fair
dealing requires that he should
communicate it to the assured, but he
designedly and intentionally withholds the
same.
The insured, Dr. Leuterio, had answered in
his insurance application that he was in
good health and that he had not consulted
a doctor or any of the enumerated
ailments, including hypertension; when he
died the attending physician had certified
in the death certificate that the former
died of cerebral hemorrhage, probably
secondary to hypertension. From this
report, the appellant insurance company
refused to pay the insurance
claim. Appellant alleged that the insured
had concealed the fact that he had
hypertension.
Contrary to appellants allegations,
there was no sufficient proof that the
insured had suffered from
hypertension. Aside from the statement
of the insureds widow who was not even
sure if the medicines taken by Dr. Leuterio
were for hypertension, the appellant had
not proven nor produced any witness who
could attest to Dr. Leuterios medical
history. HENCE, CANNOT REFUSE
PAYMENT.
FRAUDULENT INTENT; AFFIRMATIVE
DEFENSE. The fraudulent intent on
the part of the insured must be
established to entitle the insurer to
rescind the contract.
[18]
Misrepresentation as a defense of the
insurer to avoid liability is an affirmative
defense and the duty to establish such
defense by satisfactory and convincing
evidence rests upon the insurer.[19] In the
case at bar, the petitioner failed to clearly
and satisfactorily establish its defense,
and is therefore liable to pay the proceeds
of the insurance.
DBP CANNOT UNJUSTLY ENRICHED ITSELF
AND CLAIM THE PROCEEDS. WHY? Bec. it
had already foreclosed the mortgage in
satisfaction of mortgagors outstanding
loan. Thus, the insurance proceeds shall
inure to the benefit of the heirs.
RULING: AFFIRMED.
SOLIMAN v US LIFE
FACTS:
> US Life issued a 20 yr endowment life
policy on the joint lives of Patricio Soliman
and his wife Rosario, each of them being
the beneficiary of the other.
> In Mar. 1949, the spouses were
informed that the premium for Jan 1949
was still unpaid notwithstanding that the
31-day grace period has already expired,
and they were furnished at the same time
long-form health certificates for the
reinstatement of the policies.
> In Apr 1949, they submitted the
certificates and paid the premiums.
> In Jan. 1950, Rosario died of acute
dilation of the heart, and thereafter,
Patricio filed a claim for the proceeds of
the insurance.
> US life denied the claim and filed for
the rescission of the contract on the
ground that the certificates failed to
disclose that Rosario had been suffering
from bronchial asthma for 3 years prior to
their submission.
ISSUE: W/N the contract can still be
rescinded
HELD:
YES. The insurer is once again given two
years from the date of reinstatement to
investigate into the veracity of the facts
represented by the insured in the
application for reinstatement. When US
life sought to rescind the contract on the
ground of concealment/misrepresentation,
two years had not yet elapsed. Hence, the
contract can still be rescinded.
HARDING v COMMERCIAL UNION
ASSURANCE CO.
FACTS:
.The plaintiff Mrs. Henry E. Harding (given
as present to her by her husband) was the
owner of a Studebaker automobile,
registered number 2063, in the city of
Manila; that on said date; in
consideration of the payment to the
defendant of the premium of P150, by
said plaintiff, Mrs. Henry E. Harding,
with the consent of her husband, the
defendant by its duly authorized
agent, Smith, Bell & Company
(limited), made its policy of insurance
in writing upon said automobile was
set forth in said policy to be P3,000 that
the value of said automobile was set forth
in said policy (Exhibit A) to be P3,000;
NOT PAID LOSS. that on March 24, 1916,
said automobile was totally destroyed by
fire; that the loss thereby to plaintiffs was
the sum of P3,000; that thereafter, within
the period mentioned in the said policy of
insurance, the plaintiff, Mrs. Henry E.
Harding, furnished the defendant the
proofs of her said loss and interest, and
otherwise performed all the conditions of
said policy on her part, and that the
defendant has not paid said loss nor any
part thereof, although due demand was
made upon defendant therefor.
The defendant prays that judgment be
entered declaring the said policy of
insurance to be null and void, and that
plaintiffs take nothing by this action; and
for such further relief as to the court may
seem just and equitable.
CONTENTION: Appellant contends that
Mrs. Harding was not the owner of the
automobile at the time of the issuance of
the policy, and, therefore, had no
insurable interest in it. The court below
found that the automobile was given to
plaintiff by her husband shortly after the
issuance of the policy here in question.
gift was void, citing article 1334 of the
Civil Code which provides that "All gifts
between spouses during the marriage
shall be void. Moderate gifts which the
spouses bestow on each other on festive
days of the family are not included in this
rule."
ISSUE: W/N the statement regarding the
cost of the automobile was a warranty
HELD:
CONTENTION: statement regarding the
cost of the automobile was a warranty,
that the statement was false, and that,
therefore, the policy never attached to the
risk. We are of the opinion that it
has not been shown by the evidence
that the statement was false on
the contrary we believe that it shows
that the automobile had in fact cost
more than the amount mentioned.
The court below found, and the evidence
shows, that the automobile was bought by
plaintiff's husband a few weeks before the
issuance of the policy in question for the
sum of P2,800, and that between that
time and the issuance of the policy some
P900 was spent upon it in repairs and
repainting.
NOTE: The amount stated was less than
the actual outlay which the automobile
represented to Mr. Harding, including
repairs, when the insurance policy was
issued. It is true that the printed form calls
for a statement of the "price paid by the
proposer," but we are of the opinion that it
would be unfair to hold the policy void
simply because the outlay represented by
the automobile was made by the plaintiff's
husband and not by his wife, to whom he
had given the automobile.
Under these circumstances, we do
not think that the facts stated in the
proposal can be held as a warranty of
the insured, even if it should have
been shown that they were incorrect
in the absence of proof of willful
misstatement. Under such circumstance,
the proposal is to be regarded as the act
of the insurer and not of the insured.
The defendant, upon the information given
by plaintiff, and after an inspection of the
automobile by its examiner, having agreed
that it was worth P3,000, is bound by this
valuation in the absence of fraud on the
part of the insured. All statements of value
are, of necessity, to a large extent matters
of opinion, and it would be outrageous to
hold that the validity of all valued policies
must depend upon the absolute
correctness of such estimated value.
RULING: NO FRAUD IN PROCURING THE
INSURANCE.
INSULAR LIFE v FELICIANO (THE MR)
FACTS:
Evaristo Feliciano, who died on
September 29, 1935, was suffering
with advanced pulmonary
tuberculosis when he signed his
applications for insurance with the
petitioner on October 12, 1934. On
that same date Doctor Trepp, who had
taken X-ray pictures of his lungs,
informed the respondent Dr. Serafin
D. Feliciano, brother of Evaristo, that
the latter was already in a very
serious ad practically hopeless
condition. Nevertheless the question
contained in the application Have you
ever suffered from any ailment or disease
of the lungs, pleurisy, pneumonia or
asthma? appears to have been
answered , No
COLLUSION W/ THE AGENT. The false
answer above referred to, as well as the
others, was written by the Companys
soliciting agent Romulo M. David, in
collusion with the medical examiner
Dr. Gregorio Valdez, for the purpose of
securing the Companys approval of the
application so that the policy to be issued
thereon might be credited to said
agent in connection with the inter-
provincial contest which the Company
was then holding among its soliciting
agents to boost the sales of its
policies.
Agent David bribed Medical Examiner
Valdez with money which the former
borrowed from the applicants mother by
way of advanced payment on the
premium, according to the finding of the
Court of Appeals. Said court also found
that before the insured signed the
application he, as well as the members of
his family, told the agent and the medical
examiner that he had been sick and
coughing for some time and that he had
gone three times to the Santol Sanatorium
and had X-ray pictures of his lungs taken;
but that in spite of such information the
agent and the medical examiner told them
that the applicant was a fit subject for
insurance.
CONTENTION: The petitioner insists that
upon the facts of the case the policies in
question are null and void ab initio and
that all that the respondents are entitled
to is the refund of the premiums paid
thereon.
HELD:
After a careful re-examination of the facts
and the law, we are persuaded that
petitioners contention is correct.
When Evaristo Feliciano, the applicant for
insurance, signed the application in blank
and authorized the soliciting agent and/or
medical examiner of the Company to write
the answers for him, he made them his
own agents for that purpose, and he was
responsible for their acts in that
connection. If they falsified the
answers for him, he could not evade
the responsibility for the falsification.
He was not supposed to sign the
application in blank. He knew that the
answers to the questions therein
contained would be the basis of the
policy, and for that every reason he was
required with his signature to vouch for
truth thereof.
Moreover, from the facts of the case we
cannot escape the conclusion that the
insured acted in connivance with the
soliciting agent and the medical examiner
of the Company in accepting the policies
in question.
When the applicant signed the application
he was having difficulty in breathing, . . .
with a very high fever. He had gone three
times to the Santol Sanatorium and had X-
ray pictures taken of his lungs. He
therefore knew that he was not a proper
subject for life insurance. When he
accepted the policy, he knew that he was
not in good health. Nevertheless, he not
only accepted the first policy of P20,000
but then and there applied for and later
accepted another policy of P5,000.
From all the facts and circumstances of
this case, we are constrained to conclude
that the insured was a coparticipant, and
coresponsible with Agent David and
Medical Examiner Valdez, in the fraudulent
procurement of the policies in question
and that by reason thereof said policies
are void ab initio.
RULING: MR SUSTAINED.
INSULAR LIFE v FELICIANO (CASE
APPEALED FROM)
FACTS:
Evaristo Feliciano filed an application with
Insular Life upon the solicitation of one of
its agents.
> It appears that during that time,
Evaristo was already suffering from
tuberculosis. Such fact appeared during
the medical exam, but the examiner and
the companys agent ignored it.
> After that, Evaristo was made to sign
an application form and thereafter the
blank spaces were filled by the medical
examiner and the agent making it appear
that Evaristo was a fit subject of
insurance. (Evaristo could not read and
understand English)
> When Evaristo died, Insular life refused
to pay the proceeds because of
concealment.
ISSUE: Whether or not Insular Life can
avoid the insurance policy by reason of
the fact that its agent knowingly and
intentionally wrote down the answers in
the application differing from those made
by Feliciano hence instead of serving the
interests of his principal, acts in his own or
anothers interest and adversely to that of
his principal.
HELD: No. Insular Life must pay the
insurance policy. The weight of authority is
that if an agent of the insurer, after
obtaining from an applicant for insurance
a correct and truthful answer to
interrogatories contained in the
application for insurance, without
knowledge of the applicant fills in false
answers, either fraudulently or otherwise,
the insurer cannot assert the falsity of
such answers as a defense to liability on
the policy, and this is true generally
without regard to the subject matter of the
answers or the nature of the agents
duties or limitations on his authority, at
least if not brought to the attention of the
applicant.
The fact that the insured did not read the
application which he signed, is not
indicative of bad faith. It has been held
that it is not negligence for the insured to
sign an application without first reading it
if the insurer by its conduct in appointing
the agent influenced the insured to place
trust and confidence in the agent.
QUA CHE GAN v LAW UNION ROCK
FACTS:
Qua Chee Gan owns four warehouses in
Albay. He was using these warehouses to
house crops like copra and hemp. All
warehouses were insured by Law Union
and Rock Insurance for the amount of
P370,000.00. The insurance states that
Qua Chee Gan should install 11 hydrants
in the warehouses premises. Qua Chee
Gan installed only two, but Law Union
nevertheless went on with the insurance
policy and collected premiums from Qua
Chee Gan. The insurance contract also
provides that oil should not be stored
within the premises of the warehouses.
In 1940, three of the warehouses were
destroyed by fire. The damage caused
amounted to P398k. Qua Chee Gan
demanded insurance pay from Law Union
but the latter refused as it alleged that
after investigation from their part, they
found out that Qua Chee Gan caused the
fire. Law Union in fact sued Qua Chee Gan
for Arson.
Qua Chee Gan was acquitted in the arson
case. He then demanded that Law Union
pay up. This time, Law Union averred that
the insurance contract is void because
Qua Chee Gan failed to install 11
hydrants; and that gasoline was found in
one of the warehouses.
ISSUE: Whether or not the insurance
contract is void.
HELD: No. Law Union cannot exempt itself
from paying Qua Chee Gan because it is
estopped from invoking the same. It is a
well settled rule of law that an insurer
which with knowledge of facts entitling it
to treat a policy as no longer in force,
receives and accepts a premium on the
policy, estopped to take advantage of the
forfeiture.
Also, gasoline is not one of those items
specifically prohibited from the premises
of the warehouses. What was mentioned
was the word oil which could mean
anything (from palm oil to lubricant and
not gasoline or kerosene). This ambiguity
is to be interpreted against Law Union
because a contract of insurance is a
contract of adhesion. Further, oil is
incidental to Qua Chee Gans business, it
being used for motor fuel.
INCONTESTABILITY
TAN CHAY HENG v WEST COAST LIFE
FACTS:
Plaintiff alleges that he is of age and a
resident of Bacolod, Occidental Negros;
that the defendant is a foreign insurance
corporation duly organized by the laws of
the Philippines to engage in the insurance
business, on his application the defendant
accepted and approved a life insurance
policy of for the sum of P10,000 in which
the plaintiff was the sole beneficiary; that
the policy was issued upon the payment
by the said Tan Ceang of the first year's
premium amounting to P936;
The defendant agreed to pay the plaintiff
as beneficiary the amount of the policy
upon the receipt of the proofs of the death
of the insured
CLAIM. While the policy was in force; that
without any premium being due or unpaid,
Tan Ceang died on May 10, 1925; that in
June, 1925, plaintiff submitted the
proofs of the death of Tan Ceang with
a claim for the payment of the policy
which the defendant refused to pay,
for which he prays for a paid on April 10, 1925, at which time the
corresponding judgment, with legal
interest from the date of the policy,
and costs.
CONTENTION: That the insurance policy on
the life of Tan Ceang, upon which plaintiff's
action is based, was obtained by the
plaintiff in confabulation with one Go
Chulian, of Bacolod, Negros Occidental;
Francisco Sanchez of the same place; and
Dr. V. S. Locsin, of La Carlota, Negros
Occidental, thru fraud and deceit
perpetrated against this defendant in the
following manner.
ALLEGATION: That on or about the 22d
day of February, 1925, in the municipality
of Pulupandan, Occidental Negros, the
present plaintiff and the said Go Chulian,
Francisco Sanchez and Dr., V. S. Locsin,
conspiring and confederating together for
the purpose of defrauding and cheating
the defendant in the sum of P10,000,
caused one Tan Caeng to sign an
application for insurance with the
defendant in the sum of P10,000, in which
application it was falsely represented to
the defendant that the said Tan Ceang was
single and was a merchant, and that the
plaintiff Tan Chai Heng, the beneficiary,
was his nephew, whereas in truth and in
fact and as the plaintiff and his said
coconspirators well knew, the said Tan
Ceang was not single but was legally
married to Marcelina Patalita with whom
he had several children; and that he was
not a merchant but was a mere employee
of another Chinaman by the name of Tan
Quina from whom he received only a
meager salary, and that the present
plaintiff was not a nephew of the said Tan
Ceang.
That by reason of all the facts above set
forth, the temporary policy of insurance on
the life of Tan Caeng for the sum of
P10,000 upon which the present action is
base is null and void.
HELD:
It will thus be noted that the premium was
temporary policy was issued; that the
plaintiff's action was commenced on
January 4, 1926; that the original answer
of the defendant, consisting of a general
and specific denial, was filed on February
27, 1926; and that its amended answer
was filed on August 31, 1926.
Based upon those facts the plaintiff
vigorously contended in the lower court
and now contends in the court, that
section 47 of the Insurance Act should be
applied, and that when so applied,
defendant is barred and estopped to plead
and set forth the matters alleged in its
special defense. That section is as follows:
Whenever a right to rescind a
contract of insurance is given to the
insurer by any provision of this
chapter, such right must be exercised
previous to the commencement of an
action on the contract.
RESCIND. The word "rescind" has a well
defined legal meaning, and as applied to
contracts, it presupposes the existence of
a contract to rescind. means abrogate,
annul, avoid,, or cancel a contract.
The rescission is the unmaking of a
contract, requiring the same concurrence
of wills as that which made it, and nothing
short of this will suffice. There is a wide
difference between the rescission of a
contract and its mere termination or
cancellation.
IN THE CASE AT BAR: , it will be noted
that even in its prayer, the defendant does
not seek to have the alleged insurance
contract rescinded. It denies that it ever
made any contract of insurance on the life
of Tan Ceang or that any such a contract
ever existed, and that is the question
which it seeks to have litigated by its
special defense. In the very nature of
things, if the defendant never made or
entered into the contract in question,
there is no contract to rescind, and, hence,
section 47 upon which the lower based its
decision in sustaining the demurrer does
not apply.
NOTE: A right to rescind presupposes the
existence of the contract
We are clearly of the opinion that, if such
matters are known to exist by a
preponderance of the evidence, they
would constitute a valid defense to
plaintiff's cause of action. Upon the
question as to whether or not they or are
not true, we do not at this time have or
express any opinion, but we are clear that
section 47 does not apply to the
allegations made in the answer, and that
the trial court erred in sustaining the
demurrer.
RULING: REMANDED
ARGENTA v WEST COAST LIFE
FACTS:
On February 9, 1925, Bernardo Argente
signed an application for joint
insurance with his wife in the sum of
P2,000. The wife, Vicenta de Ocampo,
signed a like application for the same
policy. Both applications, with the
exception of the names and the signatures
of the applicants, were written by Jose
Geronimo del Rosario, an agent for the
West Coast Life Insurance Co. But all the
information contained in the applications
was furnished the agent by Bernardo
Argente.
Bernardo Argente was examined by Dr.
Cesareo Sta. Ana, a medical examiner for
the West Coast Life Insurance Co., on
February 10, 1925, in the office of the
Customs House. The result of such
examination was recorded in the Medical
Examiner's Report, and with the exception
of the signature of Bernardo Argente, was
in the hand-writing of Doctor Sta. Ana. But
the information or answers to the
questions contained on the face of the
Medical Examiner's Report were furnished
the doctor by the applicant, Bernardo
Argente.
TEMPORARY POLICY. A temporary
policy for P15,000 was issued to
Bernardo Argente and his wife as of
May 15, but it was not delivered to
Bernardo Argente until July 2, 1925,
when the first quarterly premium on
the policy was paid. In view of the fact
that more than thirty days had elapsed
since the applicants were examined by the
company's physician, each of them was
required to file a certificate of health
before the policy was delivered to them.
CLAIM. Vicenta de Ocampo died of
cerebral apoplexy. Thereafter Bernardo
Argente presented a claim in due form to
the West Coast Life Insurance Co. for the
payment of the sum of P15,000 the
amount of the joint life Insurance policy.
Following investigation conducted by
the Manager of the Manila office of
the insurance company, it was
apparently disclosed that the
answers given by the insured in their
medical examinations with regard to
their health and previous illness and
medical attendance were untrue. For
that reason, the West Coast Life Insurance
Co. refused to pay the claim of Bernardo
Argente, and on May 25, 1926, wrote him
to the effect that the claim was rejected
because the insurance was obtained
through fraud and misrepresentation.
ALLEGATION: The plaintiff, Bernardo be exercised previous to the
Argente, while readily conceding most of commencement of an action on the
the facts herein narrated, yet alleges that contract."
both he and his wife revealed to the
company's physician. Doctor Sta. Ana, all IN THE CASE AT BAR insurance company
the facts concerning the previous illnesses more than one month previous to the
and medical attendance, but that Doctor commencement of the present action
Sta. Ana, presumably acting in collusion, wrote the plaintiff and informed him that
with the insurance agent, Jose Geronimo the insurance contract was void because it
del Rosario, failed to record them in the had been procured through fraudulent
medical reports. representations, and offered to refund to
the plaintiff the premium which the latter
TRIAL COURT: Sps.committed false rep.as had paid upon the return of the policy for
regards their state of health during the cancellation.
period of 5 years preceding the date of
such applications. As held in California as to a fire insurance
policy, where any of the material
HELD: representations are false, the insurer's
tender of the premium and notice that the
One ground for the rescission of a contract policy is canceled, before the
of insurance under the Insurance Act is "a commencement of suit thereon, operate
concealment," which in section 25 is to rescind the contract of insurance.
defined as "A neglect to communicate that
which a party knows and ought to RULING: AFFIRMED
communicate."
[NOTE OF OTHER CASES]
CONTENTION: Appellant argues that the
alleged concealment was immaterial and
insufficient to avoid the policy. We cannot
agree. In an action on a life insurance POLICY
policy where the evidence conclusively
shows that the answers to questions ENRIQUEZ, ADMIN.OF ESTATE OF
concerning diseases were untrue, the HERRER v SUN LIFE
truth of falsity of the answers become the
determining factor. If the policy was
FACTS:
procured by fraudulent
representations, the contract of
insurance apparently set forth Joaquin Herrer made application to the
therein was never legally existent. It Sun Life Assurance Company of Canada
can fairly be assumed that had the through its office in Manila for a life
true facts been disclosed by the annuity. Two days later he paid the sum of
assured, the insurance would never P6,000 to the manager of the company's
have been granted. Manila office and was given a
[PROVISIONAL] receipt.
ANOTHER CONTENTION: Lastly, appellant
contends that even if the insurance The application was immediately
company had a right to rescind the forwarded to the head office of the
contract, such right cannot now be company at Montreal, Canada. On
enforced in view of the provisions of November 26, 1917, the head office gave
section 47 of the Insurance Act providing notice of acceptance by cable to Manila.
"Whenever a right to rescind a contract of
insurance is given to their insurer by
provision of this chapter, such right must
Atty. Aurelio A. Torres wrote to the Manila
office of the company stating that Herrer
desired to withdraw his application.
The following day the local office replied to
Mr. Torres, stating that the policy had been
issued, and called attention to the
notification of November 26, 1917. This
letter was received by Mr. Torres on the
morning of December 21, 1917. Mr. Herrer
died on December 20, 1917.
ISSUE:W/N Herrer received notice of
acceptance of his app
HELD:
he witness admitted on cross-examination
that after preparing the letter and giving it
to he manager, he new nothing of what
became of it. The local manager, Mr.
White, testified to having received the
cablegram accepting the application of Mr.
Herrer from the home office.
For the defense, attorney Manuel Torres
testified to having prepared the will of
Joaquin Ma. Herrer, that on this occasion,
Mr. Herrer mentioned his application for a
life annuity, and that he said that the only
document relating to the transaction in his
possession was the provisional receipt.
LETTER NEVER MAILED TO APP. Our
deduction from the evidence on this issue
must be that the letter of November 26,
1917, notifying Mr. Herrer that his
application had been accepted, was
prepared and signed in the local office of
the insurance company, was placed in the
ordinary channels for transmission, but as
far as we know, was never actually mailed
and thus was never received by the
applicant.
While, as just noticed, the Insurance Act
deals with life insurance, it is silent as to
the methods to be followed in order that
there may be a contract of insurance.
ACCEPTANCE. The Civil Code rule,
that an acceptance made by letter
shall bind the person making the
offer only from the date it came to his
knowledge, may not be the best
expression of modern commercial usage.
Still it must be admitted that its
enforcement avoids uncertainty and tends
to security.
In resume, therefore, the law applicable to
the case is found to be the second
paragraph of article 1262 of the Civil Code
providing that an acceptance made by
letter shall not bind the person
making the offer except from the
time it came to his knowledge.
IN THE CASE AT BAR: The pertinent fact
is, that according to the provisional
receipt, three things had to be
accomplished by the insurance company
before there was a contract: (1) There had
to be a medical examination of the
applicant; (2) there had to be approval of
the application by the head office of the
company; and (3) this approval had in
some way to be communicated by the
company to the applicant. The further
admitted facts are that the head office in
Montreal did accept the application, did
cable the Manila office to that effect, did
actually issue the policy and did, through
its agent in Manila, actually write the
letter of notification and place it in the
usual channels for transmission to the
addressee. The fact as to the letter of
notification thus fails to concur with
the essential elements of the general
rule pertaining to the mailing and
delivery of mail matter.
CONTRACT OF LIFE ANNUITY NOT
PERFECTED.
RULING: PLAINTIFF SHALL HAVE AND
RECOVER FROM THE DEFENDANT THE
SUM OF P6,000
PEREZ v CA
FACTS:
A contract of insurance, like all other
contracts, must be assented to by both
parties, either in person or through their
agents and so long as an application for
insurance has not been either accepted or
rejected, it is merely a proposal or an offer
to make a contract.
Primitivo B. Perez had been insured with
the BF Lifeman Insurance Corporation
since 1980 for P20,000.00. Sometime in
October 1987, an agent of the insurance
corporation, Rodolfo Lalog, visited Perez in
Guinayangan, Quezon and convinced him
to apply for additional insurance coverage
of P50,000.00, to avail of the ongoing
promotional discount of P400.00 if the
premium were paid annually.
Primitivo B. Perez accomplished an
application form for the additional
insurance coverage of P50,000.00. On the
same day, petitioner Virginia A. Perez,
Primitivos wife, paid P2,075.00 to Lalog.
The receipt issued by Lalog indicated the
amount received was a Corporation filed a complaint against
"deposit."[1] Unfortunately, Lalog lost
the application form accomplished by
Perez and so on October 28, 1987, he
asked the latter to fill up another
application form.[2] On November 1,
1987, Perez was made to undergo the
required medical examination, which he
passed.
Lalog forwarded the application for
additional insurance of Perez, together
with all its supporting papers, to the office
of BF Lifeman Insurance Corporation at
Gumaca, Quezon which office was
supposed to forward the papers to the
Manila office.
Perez died in an accident. He was riding in
a banca which capsized during a storm. At
the time of his death, his application
papers for the additional insurance
of P50,000.00 were still with the
Gumaca office. Lalog testified that when
he went to follow up the papers, he found
them still in the Gumaca office and so he
personally brought the papers to the
Manila office of BF Lifeman Insurance
Corporation. It was only on November 27,
1987 that said papers were received in
Manila.
APPROVED THE APP AFTER DEATH. BF
Lifeman Insurance Corporation approved
the application and issued the
corresponding policy for the P50,000.00
CLAIM. Petitioner Virginia Perez went to
Manila to claim the benefits under the
insurance policies of the deceased. She
was paid P40,000.00 under the first
insurance policy for P20,000.00
LETTER TO PETITIONER.; REFUND.
insurance company maintained that the
insurance for P50,000.00 had not been
perfected at the time of the death of
Primitivo Perez. Consequently, the
insurance company refunded the amount
of P2,075.00 which Virginia Perez had
paid.
COMPLAINT. BF Lifeman Insurance
Virginia A. Perez seeking the rescission
and declaration of nullity of the insurance
contract in question.
RTC: In favor of petitioner
CA: reversed
ISSUE: W/N the insurance contract was
perfected
HELD:
Bereft of merit.
Consent must be manifested by the
meeting of the offer and the acceptance
upon the thing and the cause which are to
constitute the contract. The offer must be
certain and the acceptance absolute.
When Primitivo filed an application for
insurance, paid P2,075.00 and submitted
the results of his medical examination, his
application was subject to the
acceptance of private respondent BF
Lifeman Insurance Corporation. The
perfection of the contract of insurance
between the deceased and respondent
corporation was further conditioned upon
compliance with the following requisites
stated in the application form:
"there shall be no contract of
insurance unless and until a policy is
issued on this application and that the
said policy shall not take effect until the
premium has been paid and the
policy delivered to and accepted by
me/us in person while I/We, am/are in
good health.
CONDITIONS FOR PERFECTION. The
assent of private respondent BF Lifeman
Insurance Corporation therefore was not
given when it merely received the
application form and all the requisite
supporting papers of the applicant. Its
assent was given when it issues a
corresponding policy to the applicant.
Under the abovementioned provision, it is
only when the applicant pays the premium
and receives and accepts the policy while
he is in good health that the contract of
insurance is deemed to have been
perfected.
ACCEPTANCE IMPOSSIBLE. Primitivo died
while his app papers were still w/ the
branch office and it was only 2 days later
when Lalog personally delivered the app
papers to the head office of Manila.
Consequently, there was absolutely
no way the acceptance of the
application could have been
communicated to the applicant for
the latter to accept inasmuch as the
applicant at the time was already
dead.
In the case at bar, the following conditions
were imposed by the respondent company
for the perfection of the contract of
insurance:
(a).......a policy must have been issued;
(b).......the premiums paid; and
(c).......the policy must have been
delivered to and accepted by the applicant
while he is in good health.
There was non-fulfillment of the condition,
however, inasmuch as the applicant was
already dead at the time the policy was
issued. Hence, the non-fulfillment of the
condition resulted in the non-perfection of
the contract.
MERE PROPOSAL/OFFER. As stated
above, a contract of insurance, like other
contracts, must be assented to by both
parties either in person or by their agents.
So long as an application for insurance has
not been either accepted or rejected, it is
merely an offer or proposal to make a
contract.
WHAT IS COMPELTED CONTRACT? The
contract, to be binding from the date of
application, must have been a completed
contract, one that leaves nothing to be
done, nothing to be completed, nothing to
be passed upon, or determined, before it
shall take effect.
Prescinding from the foregoing,
respondent corporation cannot be held
liable for gross negligence.
NOTE: Such contract CAN NEVER be
RESCINDED for there is NO contract
at all.
RULING: AFFIRMED; NULL AND VOID
CIR v LINCOLN PHIL. LIFE INSURANCE
FACTS:
Private respondent Lincoln Philippine Life
Insurance Co., Inc., (now Jardine-CMA Life
Insurance Company, Inc.) is a domestic
corporation registered with the Securities
and Exchange Commission and engaged
in life insurance business.
In the years prior to 1984, private
respondent issued a special kind of life
insurance policy known as the Junior
Estate Builder Policy, the
distinguishing feature of which is a
clause providing for an automatic
increase in the amount of life
insurance coverage upon attainment
of a certain age by the insured
without the need of issuing a new
policy. The clause was to take effect in
the year 1984. Documentary stamp
taxes due on the policy were paid by
petitioner only on the initial sum
assured.
Subsequently, petitioner issued deficiency
documentary stamps tax assessment for
the year 1984 in the amounts of
(a) P464,898.75, corresponding to the
amount of automatic increase of the sum
assured on the policy issued by
respondent, and (b) P78,991.25
corresponding to the book value in excess
of the par value of the stock dividends
Private respondent questioned the
deficiency assessments and sought their
cancellation in a petition filed in the Court
of Tax Appeals,
CTA: Deficiency in DST cancelled
CA: affirmed insofar as the DST is
concerned on insurance policy but
reversing the same with regard to the
deficiency assessment on the stock
dividends
HELD:
Petition impressed w/ merit.
The basis for the value of documentary
stamp taxes to be paid on the insurance
policy is Section 183 of the National
Internal Revenue Code which states in
part.
Sec. 183. Stamp tax on life insurance
policies. - On all policies of insurance or
other instruments by whatever name the
same may be called, whereby any
insurance shall be made or renewed
upon any life or lives, there shall be
collected a documentary stamp tax of
thirty (now 50c) centavos on each
Two hundred pesos per fractional
part thereof, of the amount insured
by any such policy.
CONTENTION: Petitioner claims that the
automatic increase clause in the subject
insurance policy is separate and distinct
from the main agreement and involves
another transaction; and that, while no
new policy was issued, the original policy
was essentially re-issued when the
additional obligation was assumed upon
the effectivity of this automatic increase
clause in 1984; hence, a deficiency
assessment based on the additional
insurance not covered in the main
policy is in order.
Section 49, Title VI of the Insurance Code
defines an insurance policy as the written
instrument in which a contract of
insurance is set forth.[5] Section 50 of
the same Code provides that the
policy, which is required to be in
printed form, may contain any word,
phrase, clause, mark, sign, symbol,
signature, number, or word necessary
to complete the contract of
insurance.[6] It is thus clear that any rider,
clause, warranty or endorsement pasted
or attached to the policy is considered
part of such policy or contract of
insurance.
CLAUSE; INTEGRAL PART OF THE
CONTRACT. The subject insurance policy
at the time it was issued contained an
automatic increase clause. Although the
clause was to take effect only in 1984, it
was written into the policy at the time of
its issuance. The distinctive feature of
the junior estate builder policy called
the automatic increase clause already
formed part and parcel of the
insurance contract, hence, there was
no need for an execution of a
separate agreement for the increase
in the coverage that took effect in
1984 when the assured reached a
certain age.
Logically, we believe that the amount
fixed in the policy is the figure written on
its face and whatever increases will take
effect in the future by reason of the
automatic increase clause embodied in
the policy without the need of another
contract.
IN THE CASE AT BAR: Here, although the
automatic increase in the amount of life
insurance coverage was to take effect
later on, the date of its effectivity, as well
as the amount of the increase, was
already definite at the time of the
issuance of the policy. Thus, the amount
insured by the policy at the time of its
issuance necessarily included the
additional sum covered by the automatic
increase clause because it was already
determinable at the time the transaction
was entered into and formed part of the
policy.
The deficiency of documentary stamp tax
imposed on private respondent is
definitely not on the amount of the
original insurance coverage, but on the
increase of the amount insured upon the
effectivity of the Junior Estate Builder
Policy.
RULING: SET ASIDE DECISION OF CA
INSOFAR AS THE DST ON INCREASE IS
CONCERNED
LIM v SUN LIFE ASSURANCE
FACTS:
On July 6, 1917, Luis Lim y Garcia of
Zamboanga made application to the
Sun Life Assurance Company of
Canada for a policy of insurance on
his life in the sum of P5,000. In his
application Lim designated his wife, Pilar
C. de Lim, the plaintiff herein, as the
beneficiary. The first premium of P433
was paid by Lim, and upon such
payment the company issued what
was called a "provisional policy." Luis
Lim y Garcia died on August 23, 1917,
after the issuance of the provisional
policy but before approval of the
application by the home office of the
insurance company.
CLAIM. The instant action is brought by
the beneficiary, Pilar C. de Lim, to recover
from the Sun Life Assurance Company of
Canada the sum of P5,000, the amount
named in the provisional policy.
The "provisional policy" upon which this
action rests reads as follows:
Received (subject to the following
stipulations and agreements) the sum of
four hundred and thirty-three pesos, being
the amount of the first year's premium for
a Life Assurance Policy on the life of Mr.
Luis D. Lim y Garcia of Zamboanga for
P5,000, for which an application dated the
6th day of July, 1917, has been made to
the Sun Life Assurance Company of
Canada.
The above-mentioned life is to be assured
in accordance with the terms and
conditions contained or inserted by the
Company in the policy which may be
granted by it in this particular case
for four months only from the date of
the application, provided that the
Company shall confirm this agreement by
issuing a policy on said application when
the same shall be submitted to the Head
Office in Montreal. Should the Company
not issue such a policy, then this
agreement shall be null and void ab
initio, and the Company shall be held
not to have been on the risk at all,
but in such case the amount herein
acknowledged shall be returned.
HELD:
Our duty in this case is to ascertain
the correct meaning of the document
above quoted. A perusal of the same
many times by the writer and by
other members of the court leaves a
decided impression of vagueness in
the mind.
Apparently it is to be a provisional policy
"for four months only from the date
of this application." We use the term
"apparently" advisedly, because
immediately following the words fixing the
four months period comes the word
"provided" which has the meaning of "if."
Otherwise stated, the policy for four
months is expressly made subjected to the
affirmative condition that "the company
shall confirm this agreement by issuing a
policy on said application when the same
shall be submitted to the head office in
Montreal." To reenforce the same there
follows the negative condition.
Should the company not issue such a
policy, then this agreement shall be null
and void ab initio, and the company shall
be held not to have been on the risk."
Certainly, language could hardly be used
which would more clearly stipulate that
the agreement should not go into effect
until the home office of the company
should confirm it by issuing a policy
PROVISIONAL POLICY ONLY AN
ACKNOWLEDGMENT. As we read and
understand the so-called provisional policy
it amounts to nothing but an
acknowledgment on behalf of the
company, that it has received from the
person named therein the sum of money
agreed upon as the first year's premium
upon a policy to be issued upon the
application, if the application is accepted
by the company.
It is of course a primary rule that a
contract of insurance, like other contracts,
must be assented to by both parties either
in person or by their agents. So long as an
application for insurance has not been
either accepted or rejected, it is merely an
offer or proposal to make a contract.
In the case of Steinle vs. New York Life
Insurance Co. ([1897], 81 Fed., 489} the
facts were that the amount of the first
premium had been paid to an insurance
agent and a receipt given therefor. The
receipt, however, expressly declared that
if the application was accepted by the
company, the insurance shall take effect
from the date of the application but that if
the application was not accepted, the
money shall be returned. The trite decision
of the circuit court of appeal was, "On the
conceded facts of this case, there was no
contract to life insurance perfected and
the judgment of the circuit court must be
affirmed."
BINDING RECEIPT. It is not an unfamiliar
custom among life insurance companies in
the operation of the business, upon
receipt of an application for insurance, to
enter into a contract with the applicant in
the shape of a so-called "binding receipt"
for temporary insurance pending the
consideration of the application, to last
until the policy be issued or the
application rejected, and such contracts
are upheld and enforced when the
applicant dies before the issuance of a
policy or final rejection of the application.
NO PERFECTED AGREEMENT. On the
contrary, the clause in the application and
the receipt given by the solicitor, which
are to be read together, stipulate
expressly that the insurance shall become
effective only when the "application shall
be approved and the policy duly signed by
the secretary at the head office of the
company and issued." It constituted no
agreement at all for preliminary or
temporary insurance;
RULING: AFFIRMED; RETURN P433
PREMIUM TO THE ESTATE OF DECEASED
GREPALIFE v CA
FACTS:
> On March 14, 1957, respondent Ngo
Hing filed an application with Grepalife for
a 20-yr endowment policy for 50T on the
life of his one year old daughter Helen Go.
> All the essential data regarding Helen
was supplied by Ngo to Lapu-Lapu
Mondragon, the branch manager of
Grepalife-Cebu. Mondragon then typed
the data on the application form which
was later signed by Ngo.
> Ngo then paid the insurance premium
and a binding deposit receipt was issued
to him. The binding receipt contained the
following provision: If the applicant shall
not have been insurable xxx and the
Company declines to approve the
application, the insurance applied for shall
not have been in force at any time and
the sum paid shall be returned to the
applicant upon the surrender of this
receipt.
> Mondragon wrote on the bottom of the
application form his strong
recommendation for the approval of the
insurance application.
> On Apr 30, 1957, Mondragon received a
letter from Grepalife Main office
disapproving the insurance application of
Ngo for the simple reason that the 20yr
endowment plan is not available for
minors below 7 yrs old.
> Mondragon wrote back the main office
again strongly recommending the
approval of the endowment plan on the
life of Helen, adding that Grepalife was the
only insurance company NOT selling
endowment plans to children.
> On may 1957, Helen died of influenza
with complication of broncho pneumonia.
Ngo filed a claim with Gepalife, but the
latter denied liability on the ground that
there was no contract between the insurer
and the insured and a binding receipt is
NOT evidence of such contract.
Issue:
Whether or not the binding deposit
receipt, constituted a temporary contract
of life insurance.
Held: NO.
The binding receipt in question was
merely an acknowledgement on behalf of
the company, that the latters branch
office had received from the applicant, the
insurance premium and had accepted the
application subject for processing by the
insurance company, and that the latter
will either approve or reject the same on
the basis of whether or not the applicant is
insurable on standard rates.
Since Grepalife disapproved the insurance
application of Ngo, the binding deposit
receipt had never became on force at any
time, pursuant to par. E of the said
receipt. A binding receipt is manifestly
merely conditional and does NOT insure
outright. Where an agreement is made
between the applicant and the agent, NO
liability shall attach until the principal
approves the risk and a receipt is given by
the agent.
The acceptance is merely conditional, and
is subordinated to the act of the company
in approving or rejecting the application.
Thus in life insurance, a binding slip or
binding receipt does NOT insure by itself.
PACIFIC TIMBER EXPORT CORP v CA
FACTS:
On March 19, l963: Pacific Timber secured
temporary insurance from Workmen's
Insurance Company, Inc. for its
exportation of 1,250,000 board feet of
Philippine Lauan and Apitong logs to be
shipped from the Diapitan Bay, Quezon
Province to Tokyo,
Japan. Workmen's issued Cover Note
insuring the cargo "Subject to the Terms
and Conditions ofthe Workmen's Insurance
Company, Inc."
April 2, 1963: regular marine
cargo policies were issued for a total of
1,195.498 bd. ft. Due to the bad
weather some of the logs were lost
during loading operations.
45 pieces of logs were salvaged,
but 30pieces were lost. Pacific informed
Workmen's who refused stating that the
logs covered in the 2 marine policies were
received in good order at the point of
destination and that the cover note was
null and void upon the issuance of the
Marine Policies4.
CFI: cover note is valid
CA: reversed
ISSUE: W/N the cover note was null and
void for alck of valuable consideration
(premium)\
HELD:
NO.
The fact that no separate premium was
paid on the Cover Note before the loss
insured against occurred, does not militate
against the validity of petitioner's
contention, for no such premium could
have been paid, since by the nature
of the Cover Note, it did not contain,
as all Cover Notes do not contain
particulars of the shipment that
would serve as basis for the
computation of the premiums. As a
logical consequence, no separate
premiums are intended or required to be
paid on a Cover Note. This is a fact
admitted by an official of respondent
company, Juan Jose Camacho, in charge of
issuing cover notes of the respondent
company.
COVER NOTE IS INTEGRAL W/ THE POLICY.
At any rate, it is not disputed that
petitioner paid in full all the premiums as
called for by the statement issued by
private respondent after the issuance of
the two regular marine insurance policies,
thereby leaving no account unpaid by
petitioner due on the insurance coverage,
which must be deemed to include the
Cover Note. . If the Note is to be treated as
a separate policy instead of integrating it
to the regular policies subsequently
issued, the purpose and function of the
Cover Note would be set at naught or
rendered meaningless, for it is in a real
sense a contract, not a mere application
for insurance which is a mere offer.
For obvious reasons, it was not necessary
to ask petitioner to pay premium on the
Cover Note, for the loss insured against
having already occurred, the more
practical procedure is simply to deduct the
premium from the amount due the
petitioner on the Cover Note. The non-
payment of premium on the Cover Note is,
therefore, no cause for the petitioner to
lose what is due it as if there had been
payment of premium, for non-payment by
it was not chargeable against its fault. Had
all the logs been lost during the loading
operations, but after the issuance of the
Cover Note, liability on the note would
have already arisen even before payment
of premium.
PURPOSE OF COVER NOTE. This is how the
cover note as a "binder" should legally
operate otherwise, it would serve no
practical purpose in the realm of
commerce, and is supported by the
doctrine that where a policy is
delivered without requiring payment
of the premium, the presumption is
that a credit was intended and policy
is valid.
RULING: COVER NOTE IS VALID
DBP v CA
FACTS:
Juan B. Dans, together with his family
applied for a loan of P500,000 with DBP. As
principal mortgagor, Dans, then 76 years
of age was advised by DBP to obtain a
mortgage redemption insurance (MRI) with
DBP MRI pool. A loan in the reduced
amount was approved and released by
DBP. From the proceeds of the loan, DBP
deducted the payment for the MRI
premium. The MRI premium of Dans, less
the DBP service fee of 10%, was credited
by DBP to the savings account of DBP MRI-
Pool. Accordingly, the DBP MRI Pool was
advised of the credit.
Dans died of cardiac arrest. DBP MRI Pool
notified DBP that Dans was not eligible for
MRI coverage, being over the acceptance
age limit of 60 years at the time of
application. DBP apprised Candida Dans of
the disapproval of her late husbands MRI
application. DBP offered to refund the
premium which the deceased had paid,
but Candida Dans refused to accept the
same demanding payment of the face
value of the MRI or an amount equivalent
of the loan. She, likewise, refused to
accept an ex gratia settlement which DBP
later offered. Hence the case at bar.
Issue:
Whether or not the DBP MRI Pool should
be held liable on the ground that the
contract was already perfected?
Held:
No, it is not liable. The power to approve
MRI application is lodged with the DBP MRI
Pool. The pool, however, did not approve
the application. There is also no showing
that it accepted the sum which DBP
credited to its account with full knowledge
that it was payment for the premium.
There was as a result no perfected
contract of insurance hence the DBP MRI
Pool cannot be held liable on a contract
that does not exist
In dealing with Dans, DBP was wearing 2
legal hats: the first as a lender and the
second as an insurance agent. As an
insurance agent, DBP made Dans go
through the motion of applying for said
insurance, thereby leading him and his
family to believe that they had already
fulfilled all the requirements for the MRI
and that the issuance of their policy was
forthcoming. DBP had full knowledge that
the application was never going to be
approved. The DBP is not authorized to
accept applications for MRI when its
clients are more than 60 years of age.
Knowing all the while that Dans was
ineligible, DBP exceeded the scope of its
authority when it accepted the application
for MRI by collecting the insurance
premium and deducting its agents
commission and service fee. Since the
third person dealing with an agent is
unaware of the limits of the authority
conferred by the principal on the agent
and he has been deceived by the non-
disclosure thereof by the agent, then the
latter is liable for damages to him.
RULING: DBP LIABLE TO DANS
BONIFACIO BROS. v MORA
FACTS:
Enrique Mora, owner of Oldsmobile
sedan model 1956, bearing plate No.
QC- mortgaged the same to the H.S.
Reyes, Inc., with the condition that
the former would insure the
automobile with the latter as
beneficiary. The automobile was
thereafter insured on June 23, 1959 with
the State Bonding & Insurance Co., Inc.,
and motor car insurance policy A-0615
was issued to Enrique Mora.
During the effectivity of the insurance
contract, the car met with an accident.
The insurance company then assigned the
accident to the Bayne Adjustment Co. for
investigation and appraisal of the damage.
Enrique Mora, without the knowledge
and consent of the H.S. Reyes, Inc.,
authorized the Bonifacio Bros. Inc. to
furnish the labor and materials, some
of which were supplied by the Ayala Auto
Parts Co. For the cost of labor and
materials, Enrique Mora was billed at
P2,102.73 through the H.H. Bayne
Adjustment Co. The insurance company
after claiming a franchise in the amount of
P100, drew a check in the amount of
P2,002.73, as proceeds of the insurance
policy, payable to the order of Enrique
Mora or H.S. Reyes,. Inc., and entrusted
the check to the H.H. Bayne Adjustment
Co. for disposition and delivery to the
proper party. In the meantime, the car
was delivered to Enrique Mora
without the consent of the H.S.
Reyes, Inc., and without payment to
the Bonifacio Bros. Inc. and the Ayala
Auto Parts Co. of the cost of repairs
and materials.
COMPLAINT. pon the theory that the
insurance proceeds should be paid directly
to them, the Bonifacio Bros. Inc. and the
Ayala Auto Parts Co. filed on May 8, 1961 a
complaint with the Municipal Court of
Manila against Enrique Mora and the State
Bonding & Insurance Co., Inc. for the
collection of the sum of money
ISSUE: whether there is privity of contract
between the Bonifacio Bros. Inc. and the
Ayala Auto Parts Co. on the one hand and
the insurance company on the other.
HELD:
The appellants are not mentioned in the
contract as parties thereto nor is there any
clause or provision thereof from which we
can infer that there is an obligation on the
part of the insurance company to pay the
cost of repairs directly to them.
STIPULATION POUR ATRUI. It
fundamental that contracts take effect
only between the parties thereto, except
in some specific instances provided by law
where the contract contains some
stipulation in favor of a third person. 1 Such
stipulation is known as stipulation pour
autrui or a provision in favor of a third
person not a pay to the contract Under
this doctrine, a third person is
allowed to avail himself of a benefit
granted to him by the terms of the
contract, provided that the
contracting parties have clearly and
deliberately conferred a favor upon
such person.
TEST: intention of the parties
IN THE CASE AT BAR: the insurance
contract does not contain any words
or clauses to disclose an intent to
give any benefit to any repairmen or
materialmen in case of repair of the
car in question. The parties to the
insurance contract omitted such
stipulation, which is a circumstance that
supports the said conclusion. On the other
hand, the "loss payable" clause of the
insurance policy stipulates that "Loss, if
any, is payable to H.S. Reyes, Inc."
indicating that it was only the H.S.
Reyes, Inc. which they intended to
benefit.
Another cogent reason for not recognizing
a right of action by the appellants against
the insurance company is that "a policy of
insurance is a distinct and independent
contract between the insured and insurer,
and third persons have no right either in a
court of equity, or in a court of law, to the
proceeds of it, unless there be some
contract of trust, expressed or implied
between the insured and third person." 5 In
this case, no contract of trust, expressed
or implied exists. We, therefore, agree
with the trial court that no cause of action
exists in favor of the appellants in so far
as the proceeds of insurance are
concerned. The appellants' claim, if at all,
is merely equitable in nature and must be
made effective through Enrique Mora who
entered into a contract with the Bonifacio
Bros. Inc.
RULING: AFFIRMED. H.S. REYES, INC. AS
is HAVING A BETTER RIGHT THAN THE
BONIFACIO BROS., INC. AND THE AYALA
AUTO PARTS COMPANY, APPELLANTS
HEREIN, TO THE PROCEEDS OF MOTOR
INSURANCE POLICY
COQUIA v FIELDSMENS INSURANCE
FACTS:
On Dec. 1, 1961, Fieldmens Insurance co.
Issued in favor of the Manila Yellow
Taxicab a common carrier insurance policy
with a stipulation that the company shall
indemnify the insured of the sums which
the latter wmy be held liable for with
respect to death or bodily injury to any
faire-paying passenger including the
driver and conductor.
> The policy also stated that in the
event of the death of the driver, the
Company shall indemnify his personal
representatives and at the Companys
option may make indemnity payable
directly to the claimants or heirs of the
claimants.
> During the policys lifetime, a taxicab of
the insured driven by Coquia met an
accident and Coquia died.
> When the company refused to pay the
only heirs of Coquia, his parents, they
institued this complaint. The company
contends that plaintiffs have no cause of
action since the Coquias have no
contractual relationship with the company.
ISSUE: Whether or not plaintiffs have the
right to collect on the policy.
HELD:
Athough, in general, only parties to a
contract may bring an action based
thereon, this rule is subject to exceptions,
one of which is found in the second
paragraph of Article 1311 This is but the
restatement of a well-known principle
concerning contracts pour autrui, the
enforcement of which may be demanded
by a third party for whose benefit it was
made, although not a party to the
contract, before the stipulation in his favor
has been revoked by the contracting
parties
There is a stipulation that the Company
"will indemnify any authorized Driver who
is driving the Motor Vehicle" of the Insured
and, in the event of death of said driver,
the Company shall, likewise, "indemnify
his personal representatives.
In the case at bar, the policy under
consideration is typical of contracts pour
autrui this character being made more
manifest by the fact that the deceased
driver paid fifty percent (50%) of the
corresponding premiums, which were
deducted from his weekly commissions.
Under these conditions, it is clear that the
Coquias who, admittedly, are the sole
heirs of the deceased have a direct
cause of action against the Company, and,
since they could have maintained this
action by themselves, without the
assistance of the insured it goes without
saying that they could and did properly
join the latter in filing the complaint
herein.
GUINGON v DEL MONTE
FACTS:
Julio Aguilar owner and operator of several
jeepneys insured them with Capital
Insurance & Surety Co., Inc.
February 20, 1961: Along the intersection
of Juan Luna and Moro streets, City of
Manila, the jeepneys operated by Aguilar
driven by Iluminado del
Monte and Gervacio Guingon bumped and
Guingon died some days after
Iluminado del Monte was charged
with homicide thru reckless imprudence
and was penalized 4 months
imprisonment
COMPLAINT. The heirs of Gervacio Guingon
filed an action for damages praying that
P82,771.80 be paid to them jointly and
severally by the driver del Monte, owner
and operator Aguilar, and the Capital
Insurance & Surety Co., Inc.
CFI: Iluminado del Monte and Julio Aguilar
jointly and severally to pay plaintiffs the
sum of P8,572.95 as damages for the
death of their father
ISSUE: W/N the contract of insurance
contains a stipulation pour atrui
HELD:
YES.
The right of a person injured to sue the
insurer of the party at fault depends on
whether the contract of insurance was
intended to benefit third persons. The test
applied here is: Where the contract
provides for indemnity against liability to
third persons, then third persons to whom
the insured is liable, can sue the insurer.
On the other hand, where the contract is
for indemnity against actual loss or
payment, then third persons cannot
proceed against the insurer, the contract
being solely to reimburse the insured for
liability actually discharged by him
through payment to third persons, said
third persons' recourse being thus limited
to the insured alone
The policy in the present case, is one
whereby the insurer agreed to indemnify
the insured "against all sums . which the Since the policy in questioned
Insured shall become legally liable to pay contained a stipulation pour autrui,
in respect of: a. death of or bodily injury to then the insurance company must
any person . . ." Clearly, therefore, it is one deliver the proceeds to the claimants.
for indemnity against liability from the fact
then that the insured is liable to the third [ NOTE OF OTHER CASES!]
person, such third person is entitled to sue
the insurer.